Saudi Arabia, Bahrain, Jordan, Oman and the United Arab Emirates are expected to reach a cumulative installed PV capacity of around 22.4 GW by 2023, according to the Global Solar Market Attractiveness Index, which was released by US market research company GTM Research, in cooperation with Saudi Arabia Solar Industry Association, Blue Horizon Energy and Global Energy Analytics.
The company’s analysts also expect newly installed PV capacity of approximately 8 GW in 2018. This growth will mainly be driven by a sizable pipeline of utility-scale projects and record low prices registered in the area for solar energy.
The region, however, is still far from taking advantage of its huge potential in terms of solar distributed generation, despite “steep cost declines and the introduction or development of net metering policies,” the authors of the index stated.
The development of solar and DG in the aforementioned countries, on the other hand, has been delayed by the fact that artificially low residential and commercial tariffs have disincentivized the adoption of behind-the-meter distributed solar solutions, the report stressed. “According to the International Monetary Fund, in the five markets analyzed in the report, fuel subsidies total nearly USD $150 billion in 2015, with Saudi Arabian outlays representing 72 percent of this total. In these focus markets, some estimates suggest that retail electricity subsidies ranged from 54 percent to 98 percent for residential electricity and from 16 percent to 96 percent for commercial electricity,” the report notes.
This situation, however, may change in the near future, as the recent drop in oil prices is pushing several governments in the region to reconsider their subsidy policies. Currently, only two countries, Jordan and the United Arab Emirates, are offering interesting opportunities for commercial solar projects, according to the report.
“These findings suggest that without below-market installation costs, accelerated phase-out of retail subsidies, or a comparable incentive program to level the playing field, it is unlikely that distributed generation solar will command a significant share of demand in markets where one-off utility-scale tenders dominate, creating a contracted project pipeline but little in the way of an underlying market ecosystem,” said the managing partner of Global Energy Analytics, Aaron Morrow.